Gold and the US Dollar Fight to the Death-Paul Craig Roberts
By Greg Hunter’s USAWatchdog.com
Former Assistant Treasury Secretary, Dr. Paul Craig Roberts, says, “Gold and the dollar are in a fight to the death.” Dr. Roberts explains, “The Fed, in order to save a handful of banks too big to fail that are the mindless deregulation of the 21st century, the Fed has had to create a tremendous number of new dollars.
The United States has never experienced anything like the creation of new money it has issued from quantitative easing, which is now multi-years old.
Because the dollar has been the world reserve currency since the end of WWII, countries all over earth have huge stocks of dollars. It’s not just countries or central banks, but companies and individuals.
As people view their holdings, an enormous supply of dollars in light of this extraordinary printing of new money by the Fed, they get nervous.
They say ‘I should lighten up my holdings of dollars and get into something else. Maybe I should get into gold or foreign currency.’ So, this puts pressure on the dollar’s exchange value.
The first way that pressure manifested itself was the rising price of gold. Despite the fact the price of gold has been pushed down since 2011, it still has about the highest rate of return of just about anything in the 21st century.
The Federal Reserve, in order to protect quantitative easing which is necessary to save the banks, began manipulating the gold price in a new and more intense way. They used their bullion banks to short the gold in the COMEX futures market.
The trouble with this policy is that it’s been going on long enough that it’s being recognized by people who formerly thought ‘the Federal Reserve would never do anything like that.’ Of course they would, and people are catching on.”
Dr. Roberts goes on to say,
“Another factor is central banks such as China and Russia are purchasing more and more gold. . . . So, what is happening is the actual physical quantity of gold is moving out to Asia in such large quantities that supply in the West to meet purchases is diminished dramatically.
This is starting to bite on the ability of the Federal Reserve of this sort of operation of rigging the gold price. . . . So, it looks like the Fed could be running out of the ability to continue this policy, in which case it will be bad news for the dollar.”
So, is the Fed losing the fight to the death between gold and the dollar? Dr. Roberts says, “They are not losing right now, but they’re running out of bullets; but the Chinese and the Russians are not running out of dollars in which to buy gold. The Fed is running out of gold in which to make these deliveries.”
What happens when physical gold can no longer be delivered to buyers? Roberts predicts, “The gold price would skyrocket.”
Dr. Roberts doesn’t give the timing for physical non-delivery of gold. He does point out, “The fact they are having now to use naked shorts in the futures market, paper gold, implies they don’t have enough real physical gold to suppress the price any longer.
So, they have to take it to the futures market where they can do it with purely paper contracts. . . . Yes, the possibility of not being able, at some point, to make delivery is real. Of course, that then would cause all confidence to be lost certainly in the dollar.”
What would the man-on-the-street experience when confidence in the dollar is lost? Dr. Roberts predicts, “What he would be subjected to from the drop in the dollar’s exchange value to other currencies would be the prices at Wal-Mart would go through the roof.
The majority of goods on Wal-Mart shelves are imports. You would see a huge hit to the living standards and ability to cope of the man-on-the-street. That’s where it all comes home to the average American.
That’s why Federal Reserve’s policies are irresponsible and reckless. They put four or five banks ahead of the entire American population. They are going to save them if they have to drive the rest of the American population into the ground.”
As far as Russia and other countries doing more and more business outside of the dollar, Dr. Roberts says this too can spark very big inflation in a short amount of time. Dr. Roberts says, “Prices can go up hundreds of times . . . in a short amount of time. It depends on the amount of fear or the extent people leave the dollar and give up on it.
This is why the Federal Reserve is so irresponsible.” So, are the Fed and Obama Administration trying to crash the dollar on purpose?
Dr. Roberts says, “No, they are just stupid and arrogant. . . . If you add up the IQ of the White House and you add up the IQ of the Fed and multiply it by a thousand trillion, it might equal 50.
These are stupid policies designed to completely destroy the U.S. dollar. . . . I don’t think the United States can win the war against gold.”
Join Greg Hunter as he goes One-on-One with Dr. Paul Craig Roberts, author of the new book called “How America was Lost.”
(There is much more in the video interview.)